Burry Holds Six AI Shorts as Market Climbs

Michael Burry’s latest note on his short positions has drawn attention as the S&P 500 reached a fresh record, driven in part by a surge in artificial‑intelligence‑related stocks.

Short bets that remain open

Burry, founder of Scion Asset Management, said on Tuesday that six of his seven short bets are still profitable. He continues to hold short positions against Nvidia, Palantir, Micron, Tesla, Caterpillar, Applied Materials and the iShares Semiconductor ETF. Nvidia is the sole losing trade, according to his Substack posting.

The hedge fund manager warned that the market could be nearing “a major top” followed by a “1987‑type fall.” He argued that the rally, while lifting the index, also makes the system more fragile. When stocks climb and volatility drops, rules‑based funds tend to increase leverage, while momentum strategies add more money to assets that are already rising. If prices reverse sharply, that added leverage could unwind quickly.

Market context and recent moves

Over four trading sessions, the S&P 500 advanced roughly five percent, yet the VIX, a gauge of expected volatility, stayed about 20 % below its July‑29 level even after a modest rise on Tuesday. Burry noted that the combination of rising equity prices and falling volatility forces vol‑targeting funds to lever up, bringing additional momentum‑driven exposure into play.

Some of the companies he is betting against continue to post strong results. Palantir announced a 93 % jump in revenue and a 149 % increase in U.S. commercial sales, prompting its shares to climb 29.5 % on Tuesday. Nvidia reported an 85 % rise in quarterly revenue, with data‑center earnings up 92 %. Micron referenced an earnings call that described AI as having “structurally transformed” the memory industry, though it declined to comment on Burry’s position.

One of Burry’s short positions has already benefited from a recent technology sell‑off. He began shorting the iShares Semiconductor ETF near $643; the ETF fell to about $505 in July, a decline of roughly 21 %. By contrast, his Nvidia short has moved against him, making it his only losing bet.

Scion no longer provides investment‑management services, so there is no public filing that details the size, entry price, or current value of these positions. Burry’s disclosures therefore rely on his own statements rather than independently verified data.

Academic commentary offers mixed views on the comparison to 1987. Campbell Harvey, a finance professor at Duke University, said the feedback loop that amplified the 1987 crash is present today, but the mechanisms differ. “The direction is similar,” he told Inc., “however, 1987 and 2026 are much different overall.” He estimated that equity trend‑following and volatility‑targeting strategies now manage about $500 billion, a fraction of the market’s $60 trillion valuation.

Robert Whaley, the Vanderbilt professor who created the VIX, was more skeptical about a repeat of the 1987 crash. He pointed out that modern exchanges can process volumes “thousands of times greater” than those in 1987, suggesting that the infrastructure today would mitigate the kind of panic‑driven halt that occurred then.

The market’s built‑in circuit breakers could temper any rapid decline. Current rules trigger a 15‑minute halt if the S&P 500 falls 7 % or 13 % before 3:25 p.m., and a full‑day stop at a 20 % drop.

While Burry has said he will exit any position that moves decisively against him, he also reminded readers that shorting is not suitable for most investors. “I must short. Most should not,” he wrote.